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Strata scheme tenants

A strata scheme comprises several properties (‘lots’) that are owned individually, and common property that is owned by an owners corporation, of which all the individual lot owners are members. Many apartment blocks and townhouse complexes are strata schemes. About half of all persons living in strata schemes are tenants.

If you are a tenant in a strata scheme, you are covered by the Residential Tenancies Act 2010 (RT Act 2010). The RT Act 2010 makes no special provisions in relation to strata scheme tenants. However, as a practical matter, strata scheme tenants often have particular problems in relation to repairs and maintenance. They are also affected by some provisions of strata schemes legislation.

As at May 2016, strata legislation is in the process of changing. The NSW Parliament has recently enacted new strata schemes legislation, the Strata Schemes Management Act 2015 (NSW) (the SSM Act 2015) and the Strata Schemes Development Act 2015 (SSD Act 2015), which are intended to commence from about September 2016. When they do, the existing legislation – the Strata Schemes Management Act 1996 (NSW) (the SSM Act 1996) and other legislation about the development of strata schemes – will be repealed. The following refers to both the existing and new legislation, as indicated.

 

Who’s who in strata schemes

As well as owner-occupiers, tenants, landlords and landlord’s agents, there are a few more legal persons involved in strata schemes:

  • The owners corporation. Formerly known as the ‘body corporate’, the owners corporation owns the common property and is responsible for the whole of the strata scheme. All owners are members of the owners corporation. The owners corporation must also appoint an executive committee - called the 'strata committee' in the SSM Act 2015 (section 29) - with a chairperson, secretary and treasurer. Under SSM Act 2015, there is provision for the strata committee to also include a tenant representative, where more than half the lots in the scheme are rented. The tenant representative cannot vote in committee proceedings, and may be asked to leave when financial matters are discussed (section 33).
  • The strata managing agent. Some owners corporations – especially in large strata schemes – engage an agent to act on their behalf and manage the scheme. Like other agents, strata managing agents are licensed under the Property, Stock and Business Agents Act 2002(NSW), and they work for the owners corporation – not you, and not any individual landlord.
  • Occupiers. An occupier is the legal occupant of a lot – whether they are an owner-occupier, a tenant, a sub-tenant or a licensee.

Repairs and maintenance

Your landlord has all the usual obligations under the RT Act 2010 in relation to the condition of the premises. If they fail to comply – for example, they don’t make necessary repairs – they are in breach of your agreement and you can seek a remedy.

However, where a defect is outside your landlord’s lot – in particular, on common property – your landlord may not be able to act directly to fix the problem. Everything beyond the surface of the walls, floor and ceiling of a lot is common property – even windows, balconies and gardens are common property – and defects here are the responsibility of the owners corporation.

This does not get your landlord out of their obligation to you – it just means that they must take up the issue with the owners corporation.

Note that you cannot use the urgent repairs provisions (RT Act 2010, section 64) in relation to defects on common property (being premises not owned by your landlord: section 62).

By-laws

All strata schemes have by-laws that regulate the operation of the scheme and the conduct of occupiers. Common by-laws deal with such matters as pets, car parking, floor coverings and the use of common property.

There are model by-laws set out in the regulations under strata legislation, but each strata scheme can have by-laws about almost anything. There are some limitations: by-laws cannot ban children or assistance animals, or interfere with an owner dealing with their lot (for example, renting it to tenants) (section 49, SSM Act 1996; section 139, SSM Act 2015); or contravene the Act or another law (section 43(4), SSM Act 1996; section 136(2)). The SSM 2015 Act also provides that by-laws must be not be harsh, unconscionable or oppressive (section 139(1)), and that by-laws that set occupancy limits cannot set a limit of fewer than two adults per bedrooms (section 137). By-laws can be changed by a special resolution (a 75 per cent majority vote) of the owners corporation (section 47, SSM Act 1996; section 141, SSM Act 2015).

If you (as an occupier) are in breach of a by-law, the owners corporation (or executive committee, or strata managing agent) may give you a notice to comply (section 45(1), SSM Act 1996; section 146, SSM Act 2015). If you don’t comply, the owners corporation may apply to the Tribunal for an order that you pay a fine, up to $550 (section 203, SSM Act 1996; $1100 section 147(3) SSM Act 2015), to either the owners corporation or the NSW State Government.

Your tenancy agreement also includes the by-laws as additional terms (section 44(2), SSM Act 1996; section 135(2) SSM Act 2015), so your landlord may also seek a remedy against you in the event of a breach.

 

Dealing with disputes

From time to time disputes arise in strata schemes, either between an occupier and the owners corporation, or between occupiers. The strata legislation sets out a process for resolving strata disputes, and as an occupier you may become involved.

Dispute resolution may proceed through a number of stages:

  1. Mediation.A party to a dispute generally must first attempt to have the dispute mediated before proceeding further (section 125(1), SSM Act 1996; section 227, SSM Act 2015)). NSW Fair Trading provides mediation services upon application (section 128, SSM Act 1996; section 218 SSM Act 2015). Mediators are impartial, and will assist you and the other party discuss possible solutions to your dispute. If you reach an agreement, you can get an order to give it effect (under the SSM Act 1996, the order is made by an Adjudicator (section 131); under the SSM Act 2015, the order is made by the Tribunal (section 230)). If you don’t agree, the dispute may proceed to the next step: under the SSM Act 1996, this is adjudication; under the SSM Act 2015, this is the Tribunal.
  2. Adjudication(SSM Act 1996). After mediation, a party to a dispute may apply to the Tribunal for adjudication. The Tribunal will then ask all parties to send a written submission (along with any other relevant documents, such as reports and photographs) to the Tribunal (section 135). An Adjudicator will consider the submissions and decide what orders to make. This decision is made ‘on the papers’ (that is, without a hearing). If you’re not satisfied with an Adjudicator’s decision, you can appeal to the Tribunal.
  3. Tribunal hearing. A party can appeal an Adjudicator’s decision to the Tribunal (section 177). The Tribunal will conduct a hearing to decide the matter. If you are not satisfied with the Tribunal’s decision, you may apply to the Appeal Panel if there’s been an error of law, jurisdictional error or failure of procedural fairness. See the NCAT section for more about the Tribunal, hearings and appeals.

Tip

Before commencing dispute resolution proceedings under strata legislation, think about whether you can deal with the problem under the RT Act 2010 instead. It’s usually:

  • More straightforward – it’s usually a matter of notifying your landlord and applying to the Tribunal;
  • Cheaper – as at May 2016, the application fee for residential (tenancy) proceedings in Tribunal is $47, versus $81 for applying for strata mediation, plus $97 for strata proceedings in the Tribunal; and
  • The remedies may be more effective – for example, you can get compensation orders under the RT Act 2010, but not under the SSM Act 1996.

 

Strata scheme terminations

Under the new SSD Act 2015, strata schemes will be more readily terminated for redevelopment (‘renewal’). The strata renewal process will provide for strata committees to receive renewal proposals and for schemes to be terminated with the approval of 75 per cent of owners (instead of unanimous approval, as required under the existing legislation) (Part 10, SSD Act 2015).

Tenants will not get a say in the strata renewal process. The final stage of the strata renewal process is the Land and Environment Court making orders to effect the renewal and terminate the scheme; this order will terminate any tenancies that may remain on foot (including fixed term tenancies) (sections 184 and 185).